Bancassurance: IRDA panel to look at norms

Banks might get to tie up with multiple insurance companies to distribute their products if a panel set up by the industry regulator comes to a consensus on the issue.

Banks might get to tie up with multiple insurance companies to distribute their products if a panel set up by the industry regulator comes to a consensus on the issue. Following requests from various life and general insurance companies asking Insurance Regulatory and Development Authority (IRDA) to allow banks to have distribution relationships with multiple insurers,the regulator has formed a seven-member committee to look into the matter.

Bancassurance,or the arrangement for insurance products distribution by banks,is a potent model for insurance companies to reach out to far-fetched places. Current regulations do not allow banks to sell insurance products of more than one insurance company. The extant regulatory structure on intermediaries does not facilitate multiple tie-ups and also require specified approval processes for multiple agencies within a group and other related structures, IRDA said in a statement here on Thursday.

Banks are also required by the Reserve Bank to address certain regulatory issues before setting-up broking entities,it said. To look into the matter the regulator has selected veterans like Deepak Satwalekar,G V Rao,S V Mony,Sandeep Bakshi,R Krinshnamurthy,N M Govardhan and A Giridhar for the job. The committee will examine the desirability for a differential treatment of insurance intermediation by banks under the bancassurance model consistent with international best practices and modified suitably to meet domestic regulatory requirements, IRDA said.

The committee would also look into the scope,content and objective of a separate set of regulation for bancassurance model,it said. Examination of changes,if any,needed on the role played by banks in the discharge of bancassurance function keeping in view the market conduct requirements and focus on the protection of interests of policyholders will also be done, IRDA said. We will try and give the report to the insurance regulator in about two-three months, said a committee member.